South Korea's April inflation hits near two-year high, raising possibility of central bank rate hike

Odaily reported that driven by oil price surges resulting from the Middle East conflict, South Korea's April CPI increase reached its highest level in nearly two years, raising the possibility that the central bank may raise interest rates in the second half of this year to curb inflationary pressures. "Although oil prices remain high, the government's nationwide fuel price cap measures have limited the rise in gasoline prices, thereby alleviating inflationary pressure," said Chun Kyu-yeon, an economist at Hana Securities. "However, due to factors such as rising airfare, the likelihood of service price inflation increasing further is growing, so the upward trend in prices will persist for some time." Kong Dong-rak, an economist at Daishin Securities, stated, "The recent remarks by the Bank of Korea's deputy governor appear to signal a step closer to focusing on inflation. The central bank may signal a policy shift this month and raise interest rates at the July meeting." The Bank of Korea has maintained its interest rate unchanged since May 2025, with the next meeting scheduled for May 28. (Jin Shi)